**Finally, the tobacco industry, whose corporate responsibility to its stockholders is to maximize profits, successfully marketed its products to the point where half of the US population were smokers. As a result, almost a half million Americans die prematurely each year – more than the total US casualties in World War II. Today, only a fifth of adult Americans are smokers. No thanks to the industry. Once again, government intervention, vigorously and persistently opposed by the tobacco industry, has curtailed marketing and has publicized the health hazards of smoking, saving the health and lives of millions.
We are all quite familiar with these "market failures," and many more. It is obvious that, in numerous undeniable cases the unregulated free market fails to "make everyone better off," as Milton Friedman would have us believe. So why, if market failures are so compellingly obvious, should we even bother to mention them? The answer is that our present government is dominated by individuals who behave as if they don't recognize these malevolent consequences of free markets. So one after another, regulations and laws designed to correct market failures are being dismantled, as government regulatory agencies are staffed with lobbyists and officers from the corporations that these agencies are charged to regulate.
But why do markets fail to produce optimal results for society at large? Railroad tycoon, William Vanderbilt (1856-1938) said it all: "the public be damned, I work for my stockholders." Moreover individual entrepreneurs and workers also want and strive for what is best for themselves. Indeed, as any neo-classical economist will insist, personal want-satisfactions (e.g., profits) are what drive an economy.
Implicit in market absolutism and libertarianism is the belief that what is best for each individual and each corporation is best for all individuals – in other words, for "society at large." As President Eisenhower's Secretary of Defense, Charles Wilson, put it: "What is good for General Motors, is good for the country." (For a refutation, see my "Good for Each, Bad for All").
Market absolutism, like "young-earth creationism" and biblical literalism, is a dogma, and thus it is untouched by hard evidence and practical experience. "Market -- good; Government -- bad. Period! Now don't confuse us with the facts."
Those who are not captivated by the dogma of market absolutism (i.e., most of us), know better. We trust the scientists who tell us that pesticides damage the ecosystem, that CFCs erode the ozone in the stratosphere, that the continuing use of fossil fuels is changing the climate. And we know that smoking causes lung cancer and premature death – the cigarette packs tell us so, not because the tobacco companies warn us out of a sense of social responsibility, but because the government requires them to print the warnings.
Government regulation, and laws restricting commercial activity, arise, not from dogma, but through accumulated practical experience and political action. As human institutions they are imperfect, which means, to be sure, that they are sometimes excessive. The appropriate response to "insolence of office" is reform, not abolition of the office – reform through the same processes of practical experience and political action.
"A new spirit of pragmatism surely requires that we discard the metaphor of market determinism – whole and entire. No more, let us bow and scrape before that altar. Markets have their place – they are a reasonably open and orderly way to assure the distribution of services and goods. They are not a general formula for the expression of social will and the working out of social problems."
Corporations quite properly work for the stockholders, and private individuals, in their economic activities, work for themselves and their families. But when these corporate interests and private activities cause social harm, who or what is most authorized to act in behalf of society – of all the people?
The solution is the same in all civilized societies: the law and the government that enacts and enforces the law. To be sure, law and government can be despotic and oppressive, and when they are, "it is [the] right, it is [the] duty" of the people "to throw off such government." (The Declaration of Independence). Such "despotism" surely includes the situation that we face today, as the corporations that should be regulated by government, instead have taken control of the government. However, in liberal democratic countries, law and government, unlike private enterprises, are authorized to act in behalf of the public at large. This, the unregulated free market can not do and must not presume to do.
There is nothing new or startling about these political principles. They are enshrined in our founding documents:
We hold these truths to be self-evident: that all men are created equal; that they are endowed by their Creator with certain unalienable Rights; that among these are Life, Liberty, and the pursuit of Happiness. That, to secure these Rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That, whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government... (Emphasis added).
And note in the Preamble to the Constitution, these enumerated legitimate functions of government: "... establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity."
And yet, the dogma of the ruling elites would ordain that we put all these founding principles aside, and in matters of public interest and social welfare, "let the market decide."
These individuals have the nerve to call themselves "conservatives."
Dr. Ernest Partridge is a consultant, writer and lecturer in the field of Environmental Ethics and Public Policy. Partridge has taught philosophy at the University of California, and in Utah, Colorado and Wisconsin. He publishes the website, "The Online Gadfly" (www.igc.org/gadfly) and co-edits the progressive website, "The Crisis Papers" (www.crisispapers.org). His book in progress, "Conscience of a Progressive," can be seen at www.igc.org/gadfly/progressive/^toc.htm .
WW1, WW2, Korean war, Vietnam war, Iraq -- innumerable wars and conflicts, poverty, plague, misery ---
This is the invisible fist: the political counterpart to the invisible hand. It is the result of just letting things happen as they will without any effort to make things better -- the 'natural' forces of greed and lust for power. If there were some 'invisible' force controling things then we should be living in a relative paradise, and should always have done so -- no intelligence, planning, contstraint, or knowledge needed.
But who is it who argues for no rules? Look now: we see Bush arguing that the Geneva Conventions, international law, the Constitution, any laws -- are obsolete and of no value. And look at the results.
The invisible hand has a name; it's name is 'chaos'.
by
bluepilgrim (0 articles, 0 quicklinks, 457 comments)
on Wednesday, June 20, 2007 at 3:06:42 PM
Note that the original quote by Smith refers to an individual. Indeed a case can always be made that when individuals trade between themselves, the trade tends to be somewhat equitable. The old barter system does work fairly well in small groups. The problem arises when "corporations" are substitute for "individuals" in Smith's model. Who am I trading with when I trade with a corporation? How can such a trade be equitable, especially when one of the parties (the corporation) can more easily modify the laws to their advantage? Smith's model of free markets is not applicable to a market consisting of both individuals and corporations. If libertarians really wanted a free market system, then they should call for the immediate abolishment of corporations (since a corporation is essentially a voluntary self-governmental organization, with specific internally-defined rules (i.e., laws) used to control how their product is created and marketed, and is thus, by definition, not a free market system). Results from studies of game theory (an area of mathematics which studies the interaction of "intelligent" systems) show that without specific and consistently applied penalties, interactions between players (i.e., buying and selling) will always lead to massive wealth inequities between players. Smith's model of the free market cannot be applied when the rules for trade are not consistent for all possible trades (the rules for trading between corporations and for trading within a corporation differ). Any conclusion based on this incorrect assumption is not logically valid.
by
djl (0 articles, 0 quicklinks, 5 comments)
on Wednesday, June 20, 2007 at 5:51:03 PM
You are dead on point. The day the Supreme Court ruled that a corporation was a person under the Constitution was the day America ceased to exist as it was envisioned.
by
Stryker05 (0 articles, 0 quicklinks, 28 comments)
on Wednesday, June 20, 2007 at 10:18:39 PM
